Vietnam Business Law Blog

According to Social Insurance Law 2014, from 1 January 2018, any employee working under a labor contract with a term of from one month to three months must participate in the compulsory social insurance scheme (SI Requirement). The social insurance contributions are paid by both employer and employee subject to the contribution rate, of which the employer usually pays larger part. However, it is not clear whether an employee working under a “probation labour contract” (hợp đồng thử việc) with a term of from one to two months (Probationary Contract) must comply with the SI Requirement. There are various views on this issue.

On one hand, one may argue that there is no social insurance contribution during the term of Probationary Contract because:

Besides setting out specific provisions for Probationary Contract, the Labour Code 2012 does not require a Probationary Contract must contain the contents of social insurance contributions like other labor contracts. Under Article 22 of the Labour Code 2012, Probationary Contract is not classified as a type of labour contract. Accordingly, it is arguable that a Probationary Contract is not considered as a labour contract, and SI Requirement is not applicable;

Since the Probationary Contract is not a labour contract, it is likely that the SI Requirement should apply only to the case where a labour contract contains the contents of probation, and the employee passes his/her probationary period in accordance with such labor contract; and

In an Official Letter in August 2017, the Social Insurance Authority of Ho Chi Minh City confirmed that employees working under Probationary Contracts are not subject to SI Requirement. However, the wording of this official letter also suggests that the Probationary Contract is a type of the labour contract.

On the other hand, one may argue that the SI Requirement should also apply to the Probationary Contract. This is because:

Under the Labor Code 2012, a labor contract means: “an agreement between an employee and an employer on a paid job, on working conditions, and on the rights and obligations of each party to the labour relationship.” The wording of this definition is broad enough to cover the Probationary Contract which establishes a labour relationship on a probation basis; and

While the Social Insurance Law 2014 fails to clarify what type of the “labour contract with a term of between one month and under three months” is, the wording regarding the term of such labour contract suggests that the SI Requirement also applies to employees working under Probationary Contract.

This post is contributed by Nguyen Hoang Duong, a trainee at Venture North Law Limited.